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Pig iron showdown as Trump puts BRICS to the wall?

Written by Stephen Miller

December 4, 2024

The BRICS countries of Brazil, Russia, India, and China, and South Africa met last month, along with several other associated nations. Among the topics discussed was the potential establishment of an alternative world currency to compete with the US dollar. It is unclear how far along this endeavor has come. The Chinese yuan has already been approved by the International Monetary  Fund (IMF) as an accepted settlement of international business transactions. But its use is nowhere close in use to the dollar. However, many of the attendees at the BRICS meeting voiced skepticism about this, citing US retaliation, among other concerns.

President-elect Donald Trump, so as not to disappoint their fears, later announced the US would levy tariffs of 100% on all imports from BRICS countries unless they ceased supporting an alternative currency. There were no further details given along with this threat.

Existing tariffs

There are already a host of tariffs and trade restrictions on China and Russia, but not so on Brazil and India, except for the Section 232 steel and aluminum tariffs and quotas. Looking where the US steelmakers and foundries source pig iron, these countries basically supply all of US pig iron imports aside from the small amounts we still receive from Ukraine.

Mutually assured destruction?

SMU reached out to a player in the Brazilian pig iron trade to get his reaction.

He said, “This kind of measure, at the market we now have, would harm both sides badly.” He shared a few facts to prove his point.

In 2023, Brazil exported 2.8 million metric tons of pig iron to the US. This accounted for 85% of US pig iron imports. The quantity was also responsible for 65% of all Brazilian exports to the US.

“I do not see, on short notice, anywhere being able to substitute for this quantity,” he added.

This is definitely the case if India is sanctioned since they have become an additional supplier to the US, as weakness still is depressing prices in South Asia.  

This article is just about pig iron. There is a multitude of imported products that would be affected by a threat like this. Let’s hope the unintended consequences of broadening tariffs can be managed so they cause limited damage to the US economy.     

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40+ years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.

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